From Volume 37, Issue 43 of EIR Online, Published Nov. 5, 2010

Global Economic News

Shanghai-Hangzhou Railroad Set To Break Records

Oct. 27 (EIRNS)—The Shanghai-Hangzhou Passenger-Dedicated Line opened on Oct. 26, with 350 km/h running cutting the 202 km journey between the cities from 1-1/2 hours to as little as 45 minutes. The line forms one side of a triangular high-speed network, which will provide journey times of less than two hours among Shanghai, Hangzhou, and Nanjing, significantly increasing capacity in the Yangtze Delta region. The 301-km Shanghai-Nanjing leg opened on July 1, and construction is underway on the 251-km direct link between Nanjing and Hangzhou.

In addition, the CRH380 train which will run on the Shanghai-Hangzhou route was taken on an experimental run, reaching a speed of 416.6 kilometers/hr. Although this does not top the 578 km/hr reached in a test run by the French TGV in 2007, the French test was conducted with the help of a TGV modified for that purpose, while the Chinese run remains the record for a normal train set. The nose shape of the locomotive was developed after extensive testing and is derived from China's Long March family of space rockets.

G-20 Offers BRIC Two New Deck Chairs on the Titanic

Oct. 25 (EIRNS)—At the end of a chaotic, contentious meeting of the G-20 Finance Ministers in South Korea last weekend, which blew apart when U.S. Treasury Secretary Tim Geithner presented his proposal to supranationally dictate the foreign trade policy of all nations, Geithner and his British allies tried to pull the following rabbit out of a hat:

A rush meeting of the G-7 and the BRIC was held on the sidelines, and a flashy reorganization of the IMF was worked out and announced, which gives the BRIC nations (Brazil, Russia, India, and China) two seats formerly held by Europe on the IMF's 24-member executive board—deck chairs on the sinking IMF. The BRIC group was also granted a 6% increase in their voting bloc—but not enough to overcome the U.S.'s 17% share, which gives it an effective veto, since all major IMF decisions require an 85% majority. And the IMF was then charged with "surveillance" over all economies, by means of which the British and Obama would like to force all nations to follow them over the edge of the hyper-inflationary cliff.

The response was prompt, and sharp:

* German Economics Minister Rainer Bruederle slammed Fed Chairman Ben Bernanke, saying that, at the meeting, "there was criticism of the American policy of creating more liquidity.... I tried to make clear that I regard that as the wrong way to go. An excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate."

* Japan's Finance Minister Yoshihiko Noda said that "a prolonged appreciation in the yen is not good for Japan's economy. Our stance, that we will take appropriate, bold action if needed, is unchanged."

* Chinese Vice Premier Wang Qishan generously invited Geithner for an unscheduled conversation in China immediately after the G-20, where Geithner again shot his mouth off (he believes China is now "committed" to allow the yuan to rise, he stated), and the Chinese smiled and promised nothing.

Europe's Sovereign Debt Crisis Set to Explode

Oct. 28 (EIRNS)—The austerity policies being forced on Greece, Portugal, Ireland, et al., are being seen as politically unsustainable and as threatening another "sovereign debt" crisis. The Guardian, and City of London mouthpiece Ambrose Evans-Pritchard in the Daily Telegraph, point to Greece, where local elections will be held on Nov. 7. Prime Minister George Papandreou has turned the elections into a referendum on his brutal austerity policy, hinting that if his PASOK party loses, new elections might be called. This news sent interest rates on Greek ten-year bonds back up above 10%, forcing the Finance Minister to assert that there is no support for fresh elections.

Then, there is the fact that the budget numbers have little relationship to reality. The Greek population is told that the deficit for 2009 was 12.4% of GDP, which was used as the measure for all the budget cuts that would reduce the deficit by 4%, in order to eventually reduce the deficit to 3%, as required by EU treaties. Now it has been revealed that the budget deficit for 2009 has been revised to above 15%, thus making the already massive cuts in the budget almost meaningless.

In Portugal, the government negotiations with the opposition over the budget collapsed on Oct. 27, with no agreement in sight. Finance Minister Fernando Texeira dos Santos said the failure of the talks will "plunge the country into a very deep financial crisis." The news sent the interest on Portuguese debt up by almost half a percentage point.

In Ireland, the government announced a EU15 billion cut in the budget over the next four years, twice what was originally planned, which sent the interest rate on its debt up another 0.25%.

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